Should Agencies Be Worried About Heineken's New Deal With Google?

Heineken Says No, so Does Its Digital Agency

In striking a multimillion-dollar global digital advertising partnership directly with Heineken, Google has revived an old debate: Is it an agency friend or foe?

The deal covers at least 20 countries and calls for the brewer to advertise on Google platforms, including YouTube, in return for consulting services, including audience targeting and joint research projects. Both companies will bring "together their marketing professionals to exchange ideas and share knowledge," Heineken said in a statement. The two companies will also work together to create mobile campaigns in emerging markets.

In other words, it sounds a bit like what digital agencies do, potentially reviving fears of a turf battle and perhaps setting back efforts by Google to shed its reputation as a "frenemy" to agencies.

The deal, first reported by Financial Times, actually began earlier this year, Heineken told Ad Age . While the brewer declined to release financial terms, U.S. spokeswoman Tara Carraro said that "suffice to say it is a significant investment for our brand, as [Heineken] does invest about 4% of its global marketing budget for digital marketing activities." The Netherlands-based brewer, which sells in nearly 180 countries, invested $2.75 billion in marketing and selling expenses in 2010, according to its financial statements. Heineken ranks No. 86 on Ad Age 's list of the top 100 global advertisers, with $351.1 million in measured media spending in 2009, the latest data available.

Henrique de Castro, Google's global president of media and platforms, in a statement called the deal "one of our biggest global display campaigns ever." He added: "It will provide Heineken with brand-building reach and the ability to carefully target their audience. And with live insights and ongoing research measuring the impact upon consumers, they will have the flexibility to suggest optimizations on a very frequent basis."

Google, which has dominated digital advertising in large part based on its appeal to direct marketers, has been on a mission to bring more brand advertisers into its fold. But Google has always presented itself as a technology service rather than a media destination and has fallen short as an attractive venue for brand messages, compared to other online-media giants. The company recently adjusted that philosophy with its video property YouTube, which it considers a natural repository for television-like advertising. In the last few months, Google created a $100 million fund to strike deals with production houses to film "safer content" that would might appeal to bigger advertisers. Its global deal with Heineken is clearly part of this larger brand strategy.

At the same time, Google has worked hard to quell fears it is out to remove ad agencies as middlemen. Hoping to endear itself to the agency community, Google has set up an agency relations team led by ex-Madison Avenue exec Torrence Boone, offered agencies free tech tools and this year spent big money to have a presence at the Cannes International Festival of Creativity .

Heineken took pains to say the deal won't change its relationships with agencies, including AKQA, its global digital agency. In the U.S., Heineken's creative agencies include Wieden & Kennedy, New York, for flagship Heineken brands, and Euro RSCG for Dos Equis. Publicis' MediaVest handles domestic media duties, while global initiatives are handled by WPP's Mindshare.

"Agencies will continue to work with us to come up with the creative campaigns," Ms. Carraro said. "The agreement with Google is to use their know-how on analytics in measuring effectiveness on consumer insights." She said Heineken operations in the U.S., Argentina, Netherlands, Taiwan and Italy have already benefited from the deal, adding that "it's available to any market both parties operate."

Tom Bedecarre, CEO of AKQA, said he is not concerned. "I'm strongly in favor of clients having a better and stronger relationship with companies like Google, Facebook and Twitter," he said. "We go out of our way to help make those introductions happen." Indeed, Mr. Bedecarre personally led a tour of Silicon Valley for Heineken brand and digital marketers, he said. It was a week of meetings with stops including Google, Facebook and LinkedIn. "I think a lot of companies have focused on New York and L.A. as media capitals, but they need to take a closer look at Silicon Valley," he said. "I'm a big proponent."

In the face of age restrictions, most big brewers have stayed fairly conservative when it comes to digital. But Heineken had been getting aggressive in recent months. Its newest global campaign for Heineken lager -- an effort by Wieden, Amsterdam, called "Open Your World" -- was first rolled out on YouTube, with the first ad called "The Entrance" generating 4 million hits globally in the first three weeks.

Alexis Nasard, chief commercial officer at Heineken, said: "Through the partnership with Google, Heineken will be able to strengthen its leadership position in the digital space. The opportunity exists to build on our successes and continue to provide exciting and compelling content to adult consumers. Our vision is to ignite the digital conversation, breaking new ground in beer advertising."

~ ~ ~ Contributing: Kunur Patel, Edmund Lee

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E.J. Schultz

E.J. Schultz is the Chicago Bureau Chief at Ad Age and covers beverage, automotive and sports marketing. He is a former reporter for McClatchy newspapers, including the Fresno Bee, where he covered business and state government and politics, and the Island Packet in South Carolina. He has won awards from the Society of American Business Editors and Writers, the Jesse H. Neal Awards, the Association of Capitol Reporters and Editors, the California Newspaper Publishers Association, the South Carolina Press Association and Investigative Reporters and Editors. A native of Cincinnati, Schultz has an economics degree from Xavier University and a masters in journalism from Northwestern University.